On January 13, 2020, the U.S. Department of Labor (DOL) announced its final rule interpreting joint employer status under the Fair Labor Standards Act (FLSA). The final rule, which becomes effective March 16, 2020, features a four-factor balancing test for determining who is a “joint employer.” The DOL will consider whether a company (i) hires or fires the employee, (ii) supervises and controls the employee’s work schedule or conditions of employment to a substantial degree, (iii) determines the employee’s rate and method of payment, and (iv) maintains the employee’s employment records. The DOL clarified that no one factor is dispositive, but that to qualify as a joint employer under the test, a company “must actually exercise—directly or indirectly—one or more of the four control factors.” The final rule also specifies that satisfying the “maintenance of the employee’s employment records” factor alone does not demonstrate joint employer status. Given the implications of joint employer status, including, without limitation, potential liability under a range of employment laws, employers should carefully assess their arrangements with third parties, such as staffing agencies and subcontractors, in order to understand whether they may, in fact, be jointly employing certain individuals.
Manatt covered this significant development in our monthly Employment newsletter. For more information, read that in-depth analysis here.
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